On Time Appraisals has answers to "Frequently Asked Questions"

On Time Appraisals is willing to reply to any questions you might have about appraisals in Sacramento County. Don't hesitate to contact us today.

Describe an appraisal
Describe what an appraiser does
Why would I require services from On Time Appraisals?
How is an appraiser different than a home inspector?
What is the difference between an appraisal and a comparative market analysis (CMA)?
What are the contents of an appraisal report?
Once the appraisal has been delivered, what assurance is there that the value indicated is trustworthy?
What does it mean for an appraiser to be licensed?
Who employs appraisers?
Where does an appraiser get the information used to estimate values in Sacramento County or other areas?
What can a full appraisal do for me?
What exactly is PMI and how can I get rid of it?
How do I get ready for the appraiser?
What does "Market Value" mean?
Does the appraisal belong to the bank or the consumer?
Are some home improvements more worthwhile than others?



Describe an appraisal   (Return to top)

An appraiser performs an estimation that leads to an opinion of value. There are three "common approaches to value" which assists the real estate appraiser conclude this opinion or valuation. One of the processes in use is the Cost Approach, which is what it would cost to restore the improvements to the property, less the depreciation and physical deterioration, adding the land value. Another of the processes is the Sales Comparison Approach - which concerns making a comparison to other similar properties within a close proximity which have recently sold. The Sales Comparison Approach is normally the most accurate and best indicator of a liklely sales price for a residential property. The Income Approach is mainly used for figuring out the market value of income-producing properties based on what an investor would pay based on the amount of capital a property produce.

Describe what an appraiser does   (Return to top)

An appraiser offers a professional, unbiased determination of market value, to be used in making real estate transactions. Appraisers document their conclusions in appraisal reports.


Why would I require services from On Time Appraisals?   (Return to top)

There are a lot of reasons to order an appraisal with the most common reason being real estate and mortgage transactions. Other reasons for getting an appraisal report include:
  • To obtain a loan.
  • If you would like to reduce your property tax obligations.
  • To build a case for a homeowner's equity and remove Primary Mortgage Insurance.
  • To challenge inflated property taxes.
  • If you need to settle an estate.
  • To offer you a leg-up when purchasing a home.
  • To find the most probable price when selling your home.
  • To defend your rights if your property is being taken by means of eminent domain in a condemnation case.
  • Because a government agency such as the IRS requires it.
  • If you ever find yourself in a lawsuit.
For a more detailed explanation of the appraisal process click here.


How is an appraiser different than a home inspector?   (Return to top)

Home inspectors do not generate an opinion of value and do not do appraisal reports. The purpose of a home inspection is to investigate the structure of the house from basement to attic. The usual home inspector's report will contain an evaluation of the integrity of the home's heating system, central air conditioning system (temperature permitting), interior plumbing and electrical systems, the roof, attic, and visible insulation, walls, ceilings, floors, windows and doors, the foundation, basement, and visible structure.

What is the difference between an appraisal and a comparative market analysis (CMA)?   (Return to top)

Frankly, it's like comparing sugar and saccharin. The CMA relies on indefinite local market trends. Appraisals use similar sales which are verifiable resources. Area and construction costs are also important in an appraisal. A CMA delivers a "ball park figure." An appraisal delivers a defensible and carefully documented opinion of value.

The credentials of the person creating the report is actually the most significant difference between a CMA and an appraisal. A CMA is created by a real estate agent who may or may not be trained in technical valuation concepts or even have a handle on market trends. The appraisal is created by a licensed, certified professional who makes a living out of valuing properties. Likewise, the agent has something at stake since they get a commission based on the property's selling price - their commission - whereas the appraiser is bound by a code of ethics to collect only a previously agreed upon fee for assignments, regardless of their outcome.

What are the contents of an appraisal report?   (Return to top)

Each report should demonstrate a credible value opinion and will identify the following:
  • Who engaged the appraiser and other intended users.
  • How the appraisal is supposed to be used.
  • The reason for the appraisal.
  • Precisely what "value" attribute is being reported and what that value means.
  • The effective date of the value opinion.(Sometimes this is in the past or maybe the future for new construction!)
  • Characteristics of the property that have a bearing on the value, including: location, physical description, legal attributes, economic factors, the property rights valued, and non-real estate items included in the appraisal, such as personal property, items that are more or less permanently installed and even intangible considerations.
  • All known easements, restrictions, encumbrances, leases, reservations, covenants, contracts, declarations, special assessments, ordinances, and other items of a similar nature.
  • Division of interest, such as fractional interest, physical segment and partial holding.
  • What was included in the process of completing the assignment.
For a more in depth look at the work that goes into an appraisal report click here: Sample Appraisal Report


Once the appraisal has been delivered, what assurance is there that the value indicated is trustworthy?   (Return to top)

In the documentation of an appraisal, each appraiser must make sure of the following:
  • The appraisal contained a suitable analysis of the information.

  • That grave errors of omission or commission were not committed individually or collectively.

  • That appraisal services were not conducted in a careless or negligent manner.

  • The final appraisal report was easy to explain, sound and defensible.
To become a state licensed appraiser, there are intense education requirements as well as real world experience that must be logged - all with the end goal of gaining the skills required to render unbiased value opinions. In addition, appraisers must abide by a strict industry code of ethics and observe national standards of practice for real estate appraisal. The rules for working up an appraisal and reporting its results are insured by enforcement of the Uniform Standards of Professional Appraisal Practice (USPAP).


   (Return to top) Licensing and certification requires coursework, tests and real world experience. Once an appraiser is licensed, he/she is required to complete continuing education courses in order to keep the license current. To see the specific requirements for any state click here.

Who employs appraisers?   (Return to top)

Mortgage lenders are an appraiser's most likely customer, using their services to ensure real estate involved in a mortgage transaction is adequate collateral for a loan. Appraisers also provide opinions for legal settlements, tax matters and investment decisions.

Where does an appraiser get the information used to estimate values in Sacramento County or other areas?   (Return to top)

Compiling data is one of the main things an appraiser engages in. Data can be described as either Specific or General. Specific data is collected from the home itself; Location, condition, amenities, size and other specific data are gathered by the appraiser during an inspection.

General data is gathered from a many sources. To research recently sold homes to be used as "comps", we typically use the local Multiple Listing Service. Tax records and other courthouse documents reveal actual sales prices in a market. Flood zone data is available from FEMA data outlets, such as a la mode's InterFlood servers.

And most importantly, the appraiser gathers general data from his or her past experience in doing assignments for other houses in the same market.


What can a full appraisal do for me?   (Return to top)

Any time the value of your home or other real property is being used to make a significant financial decision, an appraisal helps. If you're selling your home, an appraisal assists you in setting the most appropriate price. When buying, be sure you're not overpaying by getting an independent appraisal. If you're engaged in an estate settlement or divorce, it ensures that property is divided fairly. Simply put, a home is often the single, largest financial asset anybody owns. Don't make decisions in the dark with a professional appraisal.


What exactly is PMI and how can I get rid of it?   (Return to top)

PMI is an acronym for Private Mortgage Insurance. This added policy covers the lender in the event a borrower is unable to pay on the loan and the market price of the house is lower than the balance of the loan. Once you reach the point where your home's equity plus the amount you've paid is at least 20% of your loan balance, you can have your PMI dropped.

The money you keep from cancelling the PMI required when you got your mortgage will make up for the price of the appraisal in a matter of months. On Time Appraisals stays current with value trends in Sacramento and Sacramento County. Contact us today.

How do I get ready for the appraiser?   (Return to top)

We begin with an inspection of the home. What this entails is the appraiser, after setting up an appointment, personally going through the home - recording the layout of the rooms, taking photos and documenting the general status of its amenities. The best thing you can do to help is make sure we have easy access to the exterior of the house . Trim any bushes and relocate any items that would get in our way while we measure the structure. Indoors, make sure we can get to items like furnaces and water heaters.

You can make the inspection go faster and improve the quality of the appraisal report by having the following things on hand:
  • A survey or plot map of the property and building (if readily available).
  • Information on any written private agreements, such as a shared driveway with a neighbor.
  • A bill for your most recent real estate taxes which should also contain a legal description of the property.
  • Brag sheet that lists major home improvements and upgrades, the date of their installation and their cost (for example, the addition of central air conditioning or roof repairs) and permit confirmation (if available).
  • Information on "Homeowners Associations" or condominium covenants and fees.

What does "Market Value" mean?   (Return to top)

In real estate appraising, Market Value is commonly defined as:

"The most probable price (in terms of money) which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: the buyer and seller are typically motivated; both parties are well informed or well advised, and acting in what they consider their best interests; a reasonable time is allowed for exposure in the open market; payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale."



Does the appraisal belong to the bank or the consumer?   (Return to top)

In most real estate transactions, the appraisal is ordered by the lender. While the buyer pays for the report as part of the closing costs, the lender retains the right to use the report or any information contained within. The buyer is certainly entitled to a copy of the appraisal - it's usually bundled with all the other closing documents - but is not entitled to use the report for any other purpose without permission from the lender.

It's different when it's the homeowner engaging the appraiser for things outside securing a mortgage. In these situations, the appraiser may state how the appraisal can be used; for PMI removal, or estate planning or tax challenges, for example. If not stated otherwise, the home owner can do whatever they want with the appraisal.


Are some home improvements more worthwhile than others?   (Return to top)

Like all things real estate, this is dependent on a home's location. For example, installing an inline humidifier could be nice in arid regions, but completely useless near the coast!

No matter where you go, however, renovating a kitchen is almost always a safe move. According to one national survey, kitchen remodels returned an average of 88% of the investment. In other words, a $10,000 kitchen remodeling project would add approximately $8,800 to the value of the home. Bathrooms were second, yielding 85%. Adding bedrooms and baths can also help the value of your home (when done well) as long as your home doesn't then become overbuilt for your neighborhood in terms of size.

Questions, Comments, or Request a Fee?

If you have questions or comments regarding the appraisal industry, our services or our website, please leave your information and we'll get right back with you. If your requesting information on fees, please leave as much detailed information as possible such as an address and we'll get back with you ASAP!

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